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BUDGET & TAX POLICY INITIATIVE

POLICY BULLETIN
November 3, 2009

Next year’s budget shortfall grows to $12.8 billion


Recent developments have added significantly to previous projections of a $11.7 billion state budget deficit
for FY 2011. First, the Governor’s Office of Management and Budget indicated that FY 2010 revenues will
be $900 million less than original estimates. Then, the General Assembly and the Governor restored $205
million in funding for the Illinois Student Assistance Commission (ISAC), which will be financed through
short-term borrowing. These new costs bring the estimated FY 2011 budget shortfall to $12.8 billion.

How much is $12.8 billion? This amount is equivalent to total state General Funds spending for the State
Board of Education and the departments of Human Services, Children and Family Services, and Public
Health. The entire General Funds budget — aside from mandatory spending for pension costs, debt
service, and other statutory transfers — is about $26 billion. Closing a $12.8 billion gap without new rev-
enue would require devastating spending cuts, on top of those enacted this year. If such reductions were
applied across the board, they would slash 50 percent of funding from every state program; if not distrib-
uted equally, many specific cuts would run far deeper.

Revised Estimate of State Budget Deficit for FY 2011 (dollars in millions)

Loss of one-time revenue from FY 2010 $5,822


Federal ARRA (recovery) funds 1,400
Pension obligation notes 3,466
Debt restructuring 600
Fund sweeps 356

New mandated spending 2,000


Increase in pension contributions 1,200
Debt service on pension notes 800

Carryover deficit from FY 2009 3,900


Lower revenue estimate for FY 2010 900
Restoration of ISAC funding 205
______________________________________________

Total 12,827

Note: Estimate assumes all other revenue and spending at FY 2010 levels.

For more information, please contact:


Larry Joseph, Director of the Budget & Tax Policy Initiative (312-516-5556, ljoseph@voices4kids.org)
or Sean Noble, Director of Government Relations (312-516-5566, snoble@voices4kids.org).

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